Buying vs. Renting A Home

It wasn't too long ago that I was looking for a place of my own. I was very serious about it and thoroughly enjoyed my quest for the perfect pad. Of course, I decided to fully analyze my financial situation beforehand. The very first question that came to mind was, "Should I buy or rent?"

I came to the conclusion that if I could buy someone else a house — my rent would literally pay for their mortgage — then I could buy one for myself. Why should I shell out big bucks to be left with nothing in the end?

But before making a final decision, I decided to look at both sides of the coin. After all, there are a lot of people who choose to rent rather than purchase a home.

factors to consider

Here are some of the main factors that should be considered before deciding whether to buy or rent.

Location

You have to decide where you plan on living over the next five, 10 or even 30 years. If you plan on doing a lot of traveling over the next couple of years (or relocating), buying is not an option.

Employment

Your job definitely plays a big role in your final decision. If you work in a field that requires relocation every two years, you are better off renting. Working in a stable field makes purchasing a home more logical, but there are still no guarantees that you'll always be working in the same city.

Behavioral patterns

You may want to sit down and analyze your behavioral patterns when it comes to moving. Do you become easily jaded and antsy in your living environment? Do you move every year? Do you frequently consider leaving town? If so, you might want to hold off on buying a home.

Finances

Your financial situation is a major factor in buying a home. Can you afford the extra monthly payments that a mortgage requires? Do you have the cash for the down payment? What about other expenses? Are you planning on buying or leasing a car?

Your cash flow situation at the end of the month plays a major role in your decision. It is one thing to want something, but you have to determine whether you can actually afford such a commitment.

Other important questions include: Which option offers more value (expense vs. investment)? Which option offers more stability? Which one allows more tax deductions?

Still haven't decided? Take a look at the advantages and disadvantages of both options...